9 Best Ways to Invest 20k (and Make Good Money)
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So you're here because you want to know how to invest 20k, more specifically, you're here to find the best way to invest 20k. Well, deciding how to invest it can be exciting and intimidating.

Whether your bank account is overflowing with cash from an inheritance, property sale, or some other form of income, I'm going to show you how to increase its value.
Not only am I going to show you how to invest 20k, but I'm also going to show you specifically where to invest 20k to make the highest returns.
It doesn't matter if you want to know how to invest in your 20s or your 50s, there will be a suitable option for you.
Let's explore the best ways to invest 20k and make good money.
1. Invest in Stocks Through a Discount Broker
I believe that the best way to invest 20k is to invest in the stock market. The more you have invested, the more you make. I also believe this is the best way to double 20k.
It cannot be understated how important investing is to building wealth and achieving financial success.
Investing in the stock market through a discount broker is a popular way to invest in the stock market.
You can buy stocks, bonds, ETFs, options, and futures through a stock exchange.
Investing with a discount broker is a great way to invest money if you don't require investment advice.
It's cheaper to trade through a discount broker than a full-service broker, but they still charge fees. These fees typically range from 0.12% to 2% per trade depending on the broker.
Discount brokers are best suited to people who don't need investment advice, trade regularly, or have small portfolios.
The Best Discount Broker
Webull is a commission-free trading platform that gives you the tools you need to analyze and buy stocks.
This makes Webull a great option whether you’re new to investing or an experienced trader.
Webull specializes in stocks, options, and ETFs.
You can learn more about the platform through my Webull review here.
2. Invest 20k in a Mutual Fund
Investing your money in a mutual fund is a great hands-off way to grow your money.
Mutual funds pool money from many investors to invest in securities like stocks, bonds, and other assets.
Mutual funds are operated by professional money managers who often have advanced degrees in finance and economics. The manager, along with their team of analysts, allocate the fund's assets to attempt to produce capital gains and or income for the fund's investors.
Mutual Fund Fees
According to Morningstar, the average large-cap fund with assets greater than $5 million has an expense ratio of 1.45%.
For example, if you invested $20,000 in an average large-cap fund, you would have to pay $290 in fees annually. This is a small price to pay for your peace of mind, knowing that your money is managed by a professional.
Best Mutual Funds
Typically the Large Growth mutual funds offer the best long-term returns. Dave Ramsey recommends investing 15% of your after-tax income in mutual funds to build wealth.
Here are three of the largest mutual fund companies in the US:
- BlackRock Funds (iShares)
- Vanguard
- Charles Schwab
Exchange-Traded Funds (ETFs)
You could also invest through an Exchange-Traded Fund (ETF). ETFs are similar to mutual funds in that they allow you to purchase a group of stocks in one location.
I'd recommend the iShares Core S&P 500 ETF above any other actively or passively managed fund. They purchase all of the stocks in the S&P 500 index, with annual fees of just 0.03%.
Investing in this fund is the best way to grow your money with minimal effort or investing know-how.
You can purchase this ETF through a discount broker like Webull.
Keep reading to learn about full-service stockbrokers.
3. Invest in Stocks Through a Full-Service Broker
Another way to invest in stocks is through a full-service stockbroker.
Full-service stockbrokers are a bit different from discount brokers and they do more than facilitate the buying and selling of securities.
Full-service brokers are a better option for investors who need professional investment advice.
They are more expensive, however. Full-service brokers typically charge 1-2% of the total assets managed annually.
Buying stocks through a full-service broker is probably the best way to invest 20k if you don't know much about investing.
4. Invest 20k with a Robo-Advisor
Investing 20k with a Robo-advisor is a great way to gain exposure to the stock market as a newbie investor.
A Robo-advisor is basically your personal portfolio manager—except it's a software-based algorithm.
The Robo-advisor will automatically pick your investments, diversify your funds, and adjust your portfolio over time. These changes are all based on your chosen long-term investment goals.
The Best Robo-Advisor
My favorite Robo-advisor is M1 Finance.
M1 Finance allows you to easily invest in stocks and ETFs without personally managing your investments.
First, you select your investments and your allocations, then the platform automates your entire portfolio!
The platform has 80 “expert portfolios” or pies to choose from. These pies allocate your money depending on your individual investment goals.
M1 Finance has become the go-to platform for automated investing. You can learn more about the platform through my M1 Finance review here.
5. Invest in a Real Estate Investment Trust (REIT)
If you want to know how to invest 20k in real estate, this option is for you!
And don't worry, you don’t need hundreds of thousands of dollars to start investing in real estate, $20,000 is more than enough to get started.
Investing 20k in real estate is a great way to make some passive income from dividends while investing in the property market.
You can purchase shares in a REIT mutual fund or an Exchange-Traded Fund (ETF). Over 80 million Americans or roughly 40% of America’s households own REITs.
REIT shares are priced by the market throughout the trading day, like all companies that are publicly traded.
What Drives REIT Growth?
REITs will typically increase in price when their earnings increase. Higher revenues, lowering costs, and opportunities to purchase assets all cause growth in REIT earnings.
Some major factors that affect REIT revenue specifically are building occupancy rates, increased rent, and property acquisitions.
Some REITs to Invest In
Here are some of the largest and most well-known REITs for you to consider:
6. Invest 20k in Your Retirement Accounts
Another way to invest 20k is to max out your retirement accounts. Contributing to your IRA's is a great idea if you're happy to lock your money away until retirement.
You can withdraw from your 401(k) penalty-free after the age of 59 and 1/2, while the Roth IRA withdrawal rules are a bit more specific.
A 401(k) has an annual contribution limit in 2020 of $19,500, or $26,000 if you are 50 or over.
Investing through a broker or Robo-advisor might be a better decision if you want to be able to access your funds at any time, without penalty.
Advantages of Maxing Out Your Retirement Accounts
There are two main advantages to maxing out your IRAs.
Firstly, you can contribute to your 401(k) with pretax dollars, this effectively reduces your taxable income for the year.
You will have to pay taxes once you withdraw the money at retirement, but you can save money on taxes right now.
Secondly, employers will typically match your 401(k) contributions up to a certain dollar amount or percentage of your overall income. They will normally match the first 3-6% of your income.
Whatever the match is, it's free money that you'll be able to spend later.
In the next section, I'm going to show you how this would work with 20k.
Do a 401(k) Swap
With 20k at your disposal, you can effectively swap your money into your 401(k).
You won’t be able to invest 50k directly into your 401(k), but you will be able to contribute more from your salary now that you have a cash cushion.
How a 401(k) Swap Works
Let's say you make $35,000 a year and you're putting 3% of your salary into your 401(k) at the moment. That's $1,050 a year not including your employer match.
Now you've come into $20,000 and you decide to invest it. You could invest your $20,000 using any one of the methods in this list—and increase your 401(k) contributions without changing your lifestyle.
So instead of making a 3% contribution, you'd be making a 54% contribution! That will make a significant difference in your retirement fund.
Don’t leave money on the table, take advantage of employer matching.
7. Invest 20k In a High-Yield Savings Account
There are better ways to invest 20k than to put it in a savings account, but it does have its advantages.
Savings accounts are a great place to put your cash for a short period, enabling you to take it out quickly in the case of a financial emergency.
The best place to store your savings or emergency fund is in a high-yield savings account like CIT Bank's Savings Builder account.
What Is a High-Yield Savings Account?
A high-yield savings account is a bank account that typically pays a higher interest rate than you'd expect with big banks like Bank of America.
High-yield savings accounts offer the same security benefits that you’d expect from a normal savings account.
The Federal Deposit Insurance Corporation (FDIC) secures the balance of accounts in banks or thrifts, and the National Credit Union Share Insurance Fund covers accounts at credit unions.
High-yield savings accounts are a great way to store your money with minimal risk while obtaining a modest interest rate.
Opening a Savings Builder account with CIT Bank is the best way to invest 20k if you want to be able to access your money quickly.
8. Use a Peer-to-Peer Lending Platform
Another way to invest 20k is through a peer-to-peer lending platform.
Peer-to-peer lending, or P2P, is the practice of lending money to individuals or businesses through online services that will match you a borrower.
You can expect to attain a 3-7% annual return by becoming a lender on a peer-to-peer lending platform.
Peer-to-peer lending is a relatively new way to invest money, with Prosper first launching in the US in 2005.
While peer-to-peer lending platforms do offer decent returns, they are not without their disadvantages.
Here are three major disadvantages to peer-to-peer lending:
- Credit risk
- There is no insurance or government protection
- Peer-to-peer lending platforms may be illegal in your area
9. Start a College Fund
Every parent wants their student to live a successful life, and one path to success is through college.
But the fact is that college is expensive, and is showing no sign of slowing down. Investing 20k in a college fund is a great way to invest in your children's future.
The average cost for one year of college from 2015-2016 was $26,120, or $104,480 for four years. You could graduate with the same four-year degree in 1989 for $26,120!
If you want your kids to go to college and you don’t have the money ready now you should consider saving for their college education.
But what is the best way to save for college?
How to Invest 20k for College (the 529 College Savings Plan)
The 529 college savings plan is a great choice.
This plan has high contribution rates (depending on your state) and lets your money grow tax-free. Almost every state has at least one 529 plan.
Also, the right 529 plan will give you the option to change the beneficiary to another family member. So if your firstborn doesn’t want to go to college, you can use the funds for the next in line.
What Will Happen if I Invest 20k in Stocks?
Here is a graph showing what a $20,000 investment at age 25 would look like while growing at average stock market returns of 7% until age 65.

I made this graph with a great compound interest calculator created by ASIC.
As you can see, investing $20,000 in an S&P 500 index fund at age 25 would have grown to $299,489 by age 65.
You can become vastly wealthier if you continue to invest money in index funds throughout your career.
You can achieve these results with a discount stockbroker like Webull. You can learn more about the platform through my Webull review here.
How to Invest 20k Summary
It's also important that you remember to diversify your investments. $20,000 is a decent amount of money to invest, and you wouldn't want to lose it!
If you're successful, your 20k investment could be worth significantly more in a few years (as shown in the graph above).
Maybe you have even more money to invest, if so, you can visit my how to invest 50k article.
Don't forget to check out my Webull review here.